Whether in the Arizona or anywhere in the country, pursuant to 18 USC §1956, it is unlawful to knowingly engage in a financial transaction or to transport finances, that represent the proceeds of some unlawful activity (i.e. proceeds from various state and federal crimes including narcotics trafficking, Medicare fraud and embezzlement, among others), while knowing that the financial transaction or transportation you are doing is designed to conceal or disguise the nature, location, source, ownership, or control of the money.
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The term “proceeds” is very broad, and includes any property derived from or obtained or retained, directly or indirectly, through some form of unlawful activity, including the gross receipts of such activity; “proceeds” is not limited to the profits made from the unlawful activity.
Alternatively, a defendant can also be charged with a crime under 18 U.S.C. §1957, which prohibits engaging, or attempts to engage in a monetary transaction in criminally derived property of a value greater than $10,000. This statute carries a lesser punishment of maximum 10 year imprisonment.
The difference between the two statutes and the difference in the penalties is that under 18 U.S.C. §1957, the Government is not required to prove that the defendant knew the finances were proceeds from an unlawful activity. Thus, a prosecutor will seek a conviction under this section of the statute if they cannot prove under 18 U.S.C. §1956 that the defendant knew the proceeds were from an unlawful activity. Warning: If you are engaging in a financial transaction and you think the source of the funds could possibly be from an illegal activity, even though you may not have done the illegal activity, you are committing a crime simply by participating in that transaction!
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Possible Punishment for Federal Money Laundering
In 1987, the United States Sentencing Commission established the Uniform Sentencing Guidelines which proscribe a range of punishment for each of the defendant’s convictions based on the type of crime and the defendant’s previous criminal history. One of the goals of the Sentencing Commission was to bring about tougher sentencing for white collar crimes like Money Laundering. Even the most minor white collar felonies can require incarceration under the Guidelines. These Guidelines were mandatory until 2005 when the Supreme Court’s held in U.S. v. Booker that they were only advisory in nature and federal judges have discretion to impose a punishment outside of the Guideline range. Additionally, the Guideline range is limited by the statutory maximum punishment that the legislature has authorized. A judge may not impose a punishment above the statutory maximum or minimum regardless of what the Guideline calculation is.
The Guidelines assign a numerical offense level (ranging from numbers one to forty- three) for every federal offense. Level one is the lowest level of punishment, and level forty-three is the most severe (i.e., a level forty three results in life imprisonment). Every defendant is also given a criminal history number, which depending on how much criminal activity the defendant has had in the past, can increase the range of punishment. If the defendant is convicted of the underlying crime from which the laundered money is from, then the base offense level for the money laundering conviction and for the substantive conviction are the same. However, if the defendant was not convicted of the underlying crime, then the base offense level for the laundering charges is 10 if convicted of 18 U.S.C. §1956, and 9 if convicted of 18 U.S.C. §1957.
The offense level is increased based on Guidelines §2B1.1 depending on the value of the amount of money laundered. If the defendant is not convicted of the underlying crime from which the funds were laundered, but the defendant knew or believed that any of the laundered funds were the proceeds of, or were intended to promote an offense involving the manufacture, importation, or distribution of a controlled substance or a listed chemical; a crime of violence; or an offense involving firearms, explosives, national security, or the sexual exploitation of a minor, the base offense level is increased by six (6) levels. Additionally, the defendant is subject to a fine of $500,000 and their assets may also be frozen and are subject to forfeiture. A conviction under §1956 carries a maximum sentence of imprisonment of twenty (20) years, and under §1957 the maximum is ten (10) years.
However, the Guidelines also provide for a number of adjustments, called “Departures” that can either increase or decrease an offense level. This means that a judge can tailor a particular sentence to a defendant based on the factors set forth in 18 U.S.C. §3553(a). It is important to hire an attorney who can argue to the judge the myriad of reasons why the defendant should not be sentenced within the guideline range, and qualifies for a lower sentence. Since the advent of Booker, the court is obligated to consider the individual circumstances of each particular case and then render a sentence “sufficient, but not greater than necessary” for an individual defendant, both in light of the sentencing guidelines and the factors set forth in 18 U.S.C. §3553(a).
Importance of having Experienced Defense
For a Federal Money Laundering attorney to be successful in reducing a sentence, it is important to be familiar with the judge and his particular sentencing philosophy, to determine which evidence and arguments should be pursued in sentencing. It is also necessary to review the probation officer’s Pre-sentencing Report and any Sentencing Memorandums submitted by the prosecutor. At the DM Cantor, we often bring in an outside Mitigation Specialist who prepares his own mitigation report which presents all the reasons why the defendant qualifies for a reduced sentence. We sometimes use a private investigator to research any questionable information contained in the Pre-sentence Report or the Sentencing Memorandum.
Not only will a skilled Money Laundering defense attorney attack the length of the sentence, but also the place of incarceration. Although the judge cannot dictate where a sentence will be served, he can recommend to the Bureau of Prisons where the sentence should be carried out. They normally will attempt to follow the judge’s recommendation. The location of a defendant’s incarceration is obviously very important due to access to family, medical treatment, and overall quality of life. Our skilled defense attorneys will also address these issues during the sentencing procedure.
Possible Defenses for Money Laundering (Federal Violation)
The main defense to Money Laundering under 18 U.S.C. §1956 is the defendant’s lack of knowledge that the funds were from an unlawful activity. This is usually a valid defense when a person is merely an employee of a business, or a non-involved partner who is basically “duped” into managing a business whose proceeds are the result of an illegal activity. This defense can be supported with evidence from the company’s financial statements or accounting records showing material misrepresentation or omissions, committed by someone else other than the defendant. Many times one devious business partner will ask another partner to “sign off” on certain loan documents or tax returns without telling the defendant that the information contained therein is false misleading. Just because a defendant has signed off on paperwork that might be designed to cover up the source of money or funds does not mean the defendant actually knew about the source of the funds.
It is important to interview all of the parties involved to ascertain the defendant’s good character and honesty and lack of control over this area of the company’s finances, and to emphasize the partner’s bad character. Another defense that is applicable in both 18 U.S.C. §1956 and §1957 is tracing the funds involved in the transactions and proving that these specific funds did not fund, nor were the proceeds of, any unlawful activity. The defenses for Money Laundering are quite complex (as are all white collar cases) and involve many hours of records research by attorneys and expert witnesses. It is often beneficial to utilize a “forensic accountant” to also go through the documents in order to defend against the Government’s allegations.
Additionally, because our law firm fights conviction from all angles, we would assert a wide range of defenses and challenges to constitutional violations that apply in all criminal cases. The possibilities are numerous and diverse. One of those we frequently assert is a “Miranda rights violation.” In Arizona, the standard of whether any incriminating statement (i.e., a statement which tends to admit guilt) is admissible into evidence is based upon a “voluntariness” standard. If we can demonstrate that the police coerced you (i.e., intimidated or tricked you) into making a confession or inculpatory statement, or that they did not properly read you your Miranda Rights, then we can suppress those statements and any evidence gathered as a direct result of those statements.
In addition, the “denial of right to Counsel” is another common defense which is often raised. This occurs when a suspect is in custody and requests to speak to their attorney, but is denied and questioning continues. Other defenses may include challenging the validity of any search warrant, or whether there were any “forensic flaws” during the investigation of your case. Depending on what else you have been charged with, this could include exposing flawed procedures regarding fingerprints analysis; computer analysis/cloning hard drive procedures; GPS tracking monitors; forensic financial accounting reviews; etc.. Lastly, one of the most common defense tactics is exposing sloppy or misleading police reports which include everything from misstatements, false statements, flawed photo line-ups and inaccurate crime scene reconstruction. It is important to hire a skilled Money Laundering lawyer to defend you who has knowledge of all the possible defenses to assert in your case.
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